Many Have Criticized the United Auto Workers (UAW) Union for Helping

question 144

Essay

Many have criticized the United Auto Workers (UAW) union for helping to contribute to the 2008-2009 collapse of the auto industry in the United States. In a New York Times editorial, Andrew Ross Sorkin claimed that the average UAW worker was paid $70 per hour, including health and pension costs, while Toyota workers in the United States receive $10 to $20 less. These high wages he claimed were the main reason for the poor competitiveness of the United States auto industry.
Using a supply and demand graph, explain how unions such as the UAW are able to keep wages high. Do you think that higher wages do in fact contribute to the lack of competitiveness of U.S. products on average?

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Definitions:

Retirement Account

A financial account designed specifically for savings, investment, and accumulation of money for retirement.

Initial Deposit

The first sum of money placed into an account to open it or start an investment.

Nominal Interest Rate

The stated interest rate on a loan or investment, not accounting for compounding or inflation effects.

Compounded Monthly

A method of calculating interest where the accumulated interest is added to the principal sum each month, leading to an increase in the amount of subsequent interest accrued.